Cardica Misses but Losses Trim - Analyst Blog

Surgical devices maker Cardica Inc (CRDC) announced fourth quarter fiscal 2010 (ended June 30, 2010) net loss per share of 13 cents, a penny higher than the Zacks Consensus Estimate. However, net loss clipped roughly 11% year over year to $3.1 million on account of lower operating costs, helped by downsizing. For fiscal 2010, net loss trimmed 37% year over year to $10.9 million (or 50 cents a share).

Net revenues for the fourth quarter halved year over year to $1 million as the company did not book any development revenues as its patent foramen ovale (PFO) closure device development program in collaboration with Cook Medical was shelved in the quarter. Revenues were in line with the Zacks Consensus Estimate. Product sales fell 16% year over year, impacted by a smaller direct sales force. For fiscal 2010, net revenues plunged two and half fold year over year to $4 million.

Operating expenses declined 25% year over year to $4.1 million as Cardica spent less on R&D (down 13%) and selling, general and administrative/SG&A (down 45%) expenses. The significant decline in SG&A expenses is due to the company's headcount reduction program.

Cardica exited fiscal 2010 with cash and cash equivalent of roughly $6.6 million, a 25% year-over-year improvement (down 29% sequentially). The company had an outstanding debt of $1.4 million as of June 30, 2010, down 30% year over year.

Cardica manufactures proprietary stapling devices for endoscopic and cardiac surgery procedures. Its technology is designed to reduce operating time and enable minimally-invasive and robot-assisted surgeries. The company markets its automated anastomosis systems for coronary artery bypass graft (CABG) surgery and has sold over 28,000 units globally. Cardica is developing a novel endoscopic stapling device (the Microcutter ES8) for use in a variety of surgeries.

Cardica's shares got a lift recently after it inked a licensing pact with Intuitive Surgical (ISRG) on August 17, under which, Intuitive has obtained the exclusive global license to Cardica's intellectual property, related to tissue cutting, stapling and clip appliers for application in the robotics field.

In return, Intuitive made an upfront license payment of $12 million and an equity investment of about 1.25 million shares of Cardica's common stock. Cardica has used the license fee to repay all of its outstanding debt.

 
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